I have a client with this same issue. She is on 10.6.8. This Auto-correction problem seemed to happen about the same time the the 10.6.8 supplemental update was pushed out from Apple. Here is a list of my attempts to resolve this issue.
Repair Permissions: Fail
Download and Run 10.6.8 Combo updater: Fail
Remove System, Library and User libery Caches: Fail
Remove User mail Prefs, Mail and mail download folder. Recreate mail (MobileMe) account: Fail
Create a new user in System Preferences, Log into new account, create new email account (my personal MobileMe account not the client) Result: FAIL.
Rich text format is selected.
All accounts tested are IMAP accounts.
I can go to the Mail: Edit drop down menu and select (Check) the Auto-Correct feature. However if I command click on an actual email that I am composing, I CANNOT check the "Correct Spelling Automatically" option.
I can check the Grammer and Spelling option.
This is true for BOTH user accounts.
The Auto-correct feature works in Word, Text Edit and Pages.
This seems to be something on the system or program level.
I would GREATLY appreciate any suggestions!!
Terry